Narrative
Full Description
Project narrative
On December 20, 2007, the Chinese Government and the Government of Lesotho signed a concessional loan framework agreement for Phase 1 of the National Telecom Network Project. Then, after months of negotiations, China Eximbank and the Government of Lesotho signed a government concessional loan (GCL) agreement worth LSL 228 million ($32,825,081.10) on May 9, 2008 to support Phase 1 of the National Telecom Network Project. The GCL carried the following borrowing terms: a 2% interest rate, a 5-year grace period, and a 20-year maturity. The Government of Lesotho used the proceeds of the loan to on-lend to Econet Telecom Lesotho, a state-owned telecommunications operator in Lesotho. The purpose of the project was to acquire CDMA 2000 telecommunications equipment and build base stations across the country. ZTE was the contractor responsible for implementation. As of January 2009, 60% of the ZTE equipment had arrived in Maseru. Phase 1 was completed as of March 2010. ETL did not honor its repayment obligations to the Government of Lesotho under the terms of its on-lending agreement. According to a Report on the Consolidated Financial Statements of the Government of Lesotho for the Three Years 2013/14, 2014/15, and 2015/16 And Other Incidental Findings published by the Public Accounts Committee of the Parliament of Lesotho, '[Econet Telecom Lesotho] claims that it is not making profits but this is hard to believe as the Committee suspects transfer pricing practices. Again, the services have not improved as expected when the loan was secured for Econet. The Committee [is] concerned the Government of Lesotho is shouldering the burden of paying the loans on behalf of Econet while Econet is not remitting anything to the Government [of Lesotho].'
Staff comments
1. This project is also known as the Econet Telecom Lesotho National Network Project Phase I Project. The Chinese project title is 莱全国通讯网络一期项目 or 莱索托通讯网络扩充项目 or 莱莱索托国家电信网络扩展项目一期. 2. Econet Telecom Lesotho (ETL) came into being following the merger between Telecom Lesotho and Econet Ezi ~ Cel Lesotho in April 2008. When Eskom Enterprises (Pty) Limited sold its shares to Econet Wireless Global, Econet became a majority shareholder with 70% shareholding while the Government of Lesotho remained with 30%. 3. The monetary value of the loan is identified as $32,825,081.10 in the World Bank's Debtor Reporting System (DRS). See https://www.dropbox.com/s/2sw4f7gluxa52fk/DRS%20Official%20Commitments%20from%20China%20Through%202021.xlsx?dl=0 4. China Eximbank also provided an RMB 200 million loan for Phase 2 of the National Telecom Network Project (as captured via Record ID#53047).